In January, the Office of the Comptroller of the Currency (OCC) issued two final rules that address the applicability of state laws to national banks. The preemption rule and the visitorial powers rule clarified (from the OCC perspective) the extent to which the operations of national banks are subject to state laws and the exclusive nature of the OCC's authority to examine, supervise and regulate the affairs of a national bank as it conducts activities authorized under federal law. Both of the rules are discussed together as preemption of state law. The OCC's new regulations clarify that a state law does not apply to a national bank if the state law obstructs, impairs, or conditions the bank's ability to exercise a power granted to it under Federal law unless Congress has provided that the state law does apply.

The OCC issued guidance to national banks stating the OCC's expectation that when national banks or their operating subsidiaries receive customer complaints forwarded by State authorities, they must take appropriate measures to resolve those complaints fairly and expeditiously. The OCC has published a proposed rule that, once fully implemented, will result in a full listing of all national bank operating subsidiaries being available to the public over the Internet, to facilitate the processing of consumer complaints against such entities.

States have opposed the OCC regulations. The Conference of State Bank Supervisors, National Governors Association, National Association of Attorneys general, National Conference of State legislatures, and the North America Securities Administrators Association have been vocal. In particular they criticize the OCC proposal for allowing operating subsidiaries - state chartered entities - that may engage in abusive lending practices - to escape stricter state consumer laws.

The House Financial Services Committee's Subcommittee on General Oversight held a hearing on January 28 regarding the OCC preemption of state law and the Senate Banking Committee held a hearing on the matter on April 7. At both hearings, the OCC strongly supported its preemption policy. The matter continues to come up at congressional hearings on unrelated subjects; interest in the application of OCC preemption rules remains strong, especially from members who are strong supporters of state consumer protection laws.

Legislation to repeal the rules has been introduced in the Senate (S.J.Res. 31 and S.J.Res. 32) and House (H.R. 4236 and H.R. 4237). It is unlikely that the bills will be enacted.